Interview with FRANK PILLER Aachen University, Germany / MIT Media Lab, USA
Published in COMMUNICATIONS & STRATEGIES No. 89, 1st Quarter 2013
Open Innovation 2.0
Co-creating with users
This issue of C&S analyses the thematic of open innovation with a focus on co-creation with end-users
Summary of this issue: Innovation has always been a central element of competition dynamics. During the last decades, globalization, deregulation, internet, new technologies, the digital revolution, and consumers' behavior have radically modified the innovation process and the competition structure. In many areas, the offer is rich and diversified: innovation is a unique opportunity to create competitive advantages necessary for growth. Among the general topic of open innovation, this special issue focuses on users' involvement in the innovation process. It offers a collection of papers providing interesting opinions, experiences, advances and evidence.
Exclusive:
Interview with FRANK PILLER
Aachen University, Germany / MIT Media Lab, USA
Conducted by Anna Maria KOECK
ZBW – German National Library of Economics, Hamburg, Germany
C&S: Why are you interested in open innovation?
Frank PILLER: We today know that the time of the sole Schumpeterian entrepreneur is over. While there still are examples of individuals making great innovations on their own, today successful innovation is a team game.
This is not new per se. But with the internet, a number of new tools and interaction possibilities have been made possible supplement traditional forms of external partnerships in the innovation process. When I refer to open innovation, I am not talking about contract research, supplier innovation, research alliances, or market research. Open innovation in my understanding builds on new, crowdsourcing-based methods that connect an innovating firm with "unobvious" other, people that are not in its regular list of partners or in its own industry.
The core idea of open innovation is to work with an organization or with someone you didn’t know previously. When you have a problem to solve, you make it known, circulate it - whether on a large scale or by going through specialized channels like Innocentive or NineSigma.
And thanks to large network effects, going through this type of channel is not expensive any longer, we are talking about project fees of 20,000$ or less.
Is open innovation more relevant than ever?
Definetly, I’d say yes. Technologies have evolved so much that companies need help if they want to keep up. You know, whether you are a very large or a small company, customers now ask for solutions, not just products. But when you sell solutions, you need more expertise and knowledge. The outsourcing mentality is well established in the manufacturing sector. In Germany, for example, open innovation is becoming popular the moment, as we have a lot of trouble recruiting engineers.
What type of company can open innovation apply to?
Most of the present users are manufacturing companies, particularly multinationals. Companies like Unilever and Procter&Gamble, which constantly have to bring out new products and have been pioneers in open innovation. Similar in the pharmaceutical industry where research is very expensive and highly complex. Car manufacturers have been reluctant for a long time, but I think this is slowly changing. The sector which, in my opinion, would benefit from using open innovation is small and medium enterprises. SMEs have far fewer resources for innovation and often lack the time to tackle it. And I strongly recognize a growing interest from this sector today.
Is open innovation a business imperative yet? What would happen if companies continue to remain closed and locked into the traditional way of generating ideas and products without external collaboration at the society level?
Well, I would say truly closed innovation is not possible anyway. All innovation built on existing knowledge and some form of networking. But the term open innovation suggests that a company build dedicated practices to make the connection with the best external knowledge for a given innovation task better and more efficient. So for me, open innovation is not a business imperative, but a set of practices and organizational capabilities to connect with a firm's periphery for innovation.
Having said this, however, our research finds that companies need a dedicated balance between openness and closeness (Look for more at http://ssrn.com/abstract=2164766). Being too open also comes at a cost, and firms need to build dedicated internal organizational practices to become more open.
Customers are often considered the most important source of external input for innovation. But is this really true? As proven in many idea contests, great ideas come from the "common man" or outsiders. How can a company engage with these users?
Here we have to make an important distinction. Research, originating by the path-breaking work by Eric von Hippel at the MIT, has shown that many commercially important products or processes are initially thought of by innovative users rather than by manufactures. Especially when markets are fast-paced or turbulent, so called lead users face specific needs ahead of the general market participants. Lead users are characterized as users who (1) face needs that will become general in a marketplace much earlier before the bulk of that marketplace encounters them; and (2) are positioned to benefit significantly by obtaining a solution for those needs.
But lead users are NO average customers or users. There are only very few lead users. Average customers are in general neither innovative nor do they want to engage in innovation. Hence, it is the task of a company to identify these lead users by specific search and screening methods. There is not enough space here to describe these methods, but they are very well documented (look at Eric von Hippel's MIT homepage for some examples).
And ideation contests indeed are a great way to engage with "unobvious" users and idea providers. A company broadcasts a task or challenge, calling for ideas, and users self-select to participate. In this way, it are not representative customers like in market research or focus groups who provide input, but people that really have a problem or already a solution.
In a way co-creation can be defined as outsourcing idea generation to the society. What is your exact definition of this concept? And what is the main benefit for companies?
Customer co-creation has been defined by us as an active, creative and social process, based on collaboration between producers (retailers) and customers (users). Customers are actively involved and take part in the design of new products or services. Their co-creation activities are performed in an act of company-to-customer interaction which is facilitated by the company. The objective is to utilize the information and capabilities of customers and users for the innovation process.
The main benefit is to enlarge the base of information about needs, applications, and solution technologies that resides in the domain of the customers and users of a product or service. Examples for methods to achieve this objective include user idea contests, consumer opinion platforms, toolkits for user innovation, mass customization toolkits, and communities for customer co-creation.
The main benefit for companies is to enhance the "fit to market", but also to engage in a more interactive, engaged relationship with their customers and users – with great effects for relationship marketing!
Being open about problems are not yet a norm in the market place, where companies are conversing predominantly about what they know, more than what they do not know. What are your comments?
Good question! This indeed is one of the largest challenges we see in the field today. Many companies know about the tools or methods to co-create that I named previously. But they are not ready to internally exploit the knowledge generated with their customers and users. Here I believe we still need plenty of change management to change this mind-set you mention!
This is a field where I believe we also need more research. Firms need more information and better guidance on how to assess whether their organization and branch is suited for customer co-creation. This information is crucial in order to build specific competences that aid firms in identifying opportunities and ultimately in using the right method. Managers need a clear picture of their own organizational settings and capabilities before being able to answer important questions during the implementation of one’s own customer integration initiative. This could include answers to questions like how innovation projects have to be reorganized, which kinds of projects are suited for customer integration and how the internal development processes have to be adjusted in order to allow optimal customer integration.
The internal readiness of companies – such as having a co-creation team/department, methodology, etc – is often lacking in companies that spend huge sums on co-creation projects, which are mostly managed by corporate communication departments or marketing departments. Do you advocate the formation of a multi-disciplined co-creation team that can do the job of creating, running co-creation projects? Is it not an exclusive, specialized professional/managerial skill – like branding, marketing, finance – by itself?
Yes, you already provided the answer by yourself. The problem, however, is that there are still very few companies that have such a co-creation team in place, many even don't have one functional manager taking care of the initiative. But this will change, and I think that the first organizations are building exactly these interdisciplinary teams you are talking about.
What is the link between the success of a co-creation project and the performance of the base product or initiative?
To answer this interesting question, we only have anecdotal evidence that co-creation provides value. But large scale quantitative research is lacking. However, I know that several researchers are just in the progress of conducting this research, and so I hope that in a few years or so, we will get a better answer on the performance effects of co-creation. A very first study recently has been published by Martin Schreier from WU Vienna, and he found together with a team from Japan, using data from a large Japanese retailer, that indeed user-generated products are much more profitable than internally created products (more at http://tinyurl.com/ae2bu6a). And I personally have seen many companies profiting from co-creation, if it is executed correctly and the results are used internally in the right way.
Biography
Frank PILLER is a professor of management and the director of the Technology & Innovation Management Group at RWTH Aachen University, Germany. He also is a co-director of the MIT Smart Customization Group at the MIT Media Lab, USA. His research focuses on innovation interfaces: How can organizations increase innovation success by designing and managing better interfaces within their organization and with external actors. This stream of research includes topics like value co-creation between businesses and customers/users, strategies to increase the productivity of technical problem solving by open innovation, and models to cope with contingencies of the innovation process. Frank Piller's research is supported by grants from the European Commission, the DFG, BMBF, and other institutions. He has consulted and delivered executive workshops for many Dax30 and Fortune500 companies. As an investor, member of the Board of Directors or as a scientific adviser of several technology companies, he transfers his research into practice.
Published in COMMUNICATIONS & STRATEGIES No. 89, 1st Quarter 2013
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Contact
COMMUNICATIONS & STRATEGIES
Sophie NIGON
Managing Editor
s.nigon@idate.org
Interview with Henri VERDIER Director of Etalab, Services of the French Prime Minister
Published in COMMUNICATIONS & STRATEGIES No. 89, 1st Quarter 2013
Open Innovation 2.0
Co-creating with users
This issue of C&S analyses the thematic of open innovation with a focus on co-creation with end-users
Summary of this issue: Innovation has always been a central element of competition dynamics. During the last decades, globalization, deregulation, internet, new technologies, the digital revolution, and consumers' behavior have radically modified the innovation process and the competition structure. In many areas, the offer is rich and diversified: innovation is a unique opportunity to create competitive advantages necessary for growth. Among the general topic of open innovation, this special issue focuses on users' involvement in the innovation process. It offers a collection of papers providing interesting opinions, experiences, advances and evidence.
Exclusive:
HENRI VERDIER's Interview
Director of Etalab, Services of the French Prime Minister
Interview conducted by Gilles FONTAINE (IDATE, Montpellier/Paris)
C&S: Henri Verdier, you were co-author of L'âge de la multitude ['The age of the multitude'], which explains how individuals, outside organisations, are now crucial to creation and growth. Do they play a particular role in the process of innovation of products and services?
Henri VERDIER: Certainly.
Their first role, as we often forget, is to choose, from among all the inventions, the ones that they will make true innovations. That is to say, the ones that will be transformed into progress, both because the audience has adopted them and because of the uses it will make of them. It is in this sense that we speak of "use-driven innovations": not because they are driven by the value of use, as marketing sometimes imagines, but because they are driven by "usage patterns and customs", by the manner in which society organises itself with these innovations.
But this isn't something that dates back only to the beginning of the digital age - it is the common law of innovation in Humanity. What has changed of late is the number of individuals who are educated, equipped and connected, who, by virtue of the sum of their creations, or even their small contributions, can support radical innovations as we see on the Internet.
This is rather good news. But at the same time, we must be aware this "free labour" of Internet users, whether they are active (voluntary contributions) or passive (through data or even usage history), can also be monopolised by major platforms. Most of the time, Internet users feel that the service rendered to them by these platforms is only worth the contribution they are able to make. But it is clear that this can raise a few questions, in terms of protection of privacy and international taxation. Thus Nicolas Colin, co-author of L’Age de la multitude, was tasked with reflecting on the tax implications of this new means of creating value.
Are the social networks the nexus of this open innovation, driven by users?
Yes, if you accept a broad definition of "social network". The big social networks are of course major players in digital. But the phenomenon goes far beyond what happens on Facebook or LinkedIn...
It is quite easy to see that most of the major digital applications have a social dimension, even if you wouldn't call them "social networks" per se. Such is the case of Flickr, digital cameras that automatically connect to YouTube, Google searches, etc. The famous online teaching service, Coursera, probably owes its success not to the quality of its courses (other prestigious universities had already launched similar services), but rather to the power of interaction it affords among students. Someone had this say: "People had never seen an educational project that delegates part of the work to the students themselves."
More broadly, one could say that communities are the basic unit of the Internet. The fact that you have friends, belong to a community, share your interests, support a cause, etc. make you a stakeholder in the Internet. There are therefore social networks beyond the realm of Facebook and Twitter. The great experiences of crowdfunding, crowdsourcing, viral communication, etc. do not necessarily go through the social networks. So we mustn’t neglect any of the networks that emerge on the web: massively multiplayer games, virtual campuses, virtual currencies with their user communities, NGO activists – all of these have the potential to greatly empower the individual.
What is your take on the living labs, which hope to bring users together upstream in the innovation process?
It's an excellent approach when it doesn't get caught in the rut of being an overly utilitarian "test bench". Living labs, as with all those third-party spaces that are fond the digital ecosystem (coworking spaces, Fablabs, etc.) are fertile when they are alive. They must leave room for the unexpected, for creative randomness ("serendipity"), develop subtle listening, propose new formats of interaction, find co-creation strategies, etc.
You also presided over the "Cap Digital" Centre for Competitiveness. How can companies rethink their innovation processes to take advantage of this new situation? In particular, how do you see the future of R&D in big companies?
Firstly, I think it is essential that the major technology companies pursue and intensify their R&D efforts. The basic materials of innovation come from research and development, and if there is one characteristic of our times, it is that the pace of innovation continues to accelerate.
One should now, however, confuse R&D with innovation. Innovation is not the natural continuation of R&D. There are big innovative companies that do not have R&D, particularly in the fields of service, content publishing and communications. And where innovation is concerned, every company should learn to better harness the strength of the multitude. Such as by involving their own employees in the multitude. The formats of open innovation, listening and working with one's market, and incorporating design into the heart of the decision-making process are starting to become rather well documented methods.
Does this vision of "open innovation" imply a change in the way intellectual property is managed?
This is a complex question.
Since the Internet has become popularised, it is caught between the opposing forces of openness, open source, and being free, on the one hand, and closure, protection and privatisation on the other. This tension is structural. One the one hand, there wouldn't be any progress, perhaps even a company, without information commons (what would science be if the results of research weren't accessible to other researchers?). At the same time, we are well aware that most economic sectors need clearly defined assets to prosper. It is likely that the best answer is to strike a happy medium.
But, personally, I think nowadays there is a tendency to broaden the scope of application of intellectual property too much. Copyright was originally intended for intellectual work which was a creative expression of the author's personality. That is to say, work from his very soul, as it were. I'm not so sure that people have put their soul into all the creation for which this type of copyright protection is being claimed.
You are now the director of Etalab, the agency responsible for promoting open data in Fraance. Could one say that shared data is the prerequisite of open innovation?
Yes, that is what I believe.
This is not the only reason it is good to open up and share public data: citizens also have a right to demand the accountability of authorities, which is the hallmark of democracies. And there are innovation strategies for the administration itself, since creating large open repositories is often a guarantee of improving an organisation's efficacy.
But supporting innovation is clearly a key component of opening up public data. The services developed by citizens, individuals or companies using such data are impressive. We see them at every edition of the Dataconnexion event launched by Etalab, and they are really quite impressive.
The opening of public data will increasingly become a springboard for industrial policy. It will become a strategy for attracting innovation to one's territory (since these creators work in the territories that have published data), even transforming public action into a platform and preventing these innovations from becoming monopolised by other players.
Is the opening of data often associated with public data? Should companies be encouraged to share their data more? How?
In this respect, the State began before the business, which is understandable. The right of citizens to access public information dates back a long time. It is enshrined in the Declaration of the Rights of Man and of the Citizen, and has been part of French legislation since the CADA Law of 1978.
The debate on the opening up of public data has therefore not been too concerned with data held by companies. But I think the question will arise one day.
It will be raised because large companies too will discover the potential to boost efficiency by placing large repositories online and increasing their transparency. It will also be raised since companies will one day likely have to identify the "information commons" that it owns and which must be made accessible to all. This will probably happen when the big data collectors reach such monopolistic proportions that States are forced to require that they open up these new kinds of infrastructures to competition.
Biography
Since January 2013 Henri Verdier has been the director of Etalab (tasked with the opening up of public data), coordinated by the Secretariat-General for the Modernisation of Public Action, itself a part of the Office of the Prime Minister. An alumnus of École normale supérieure, Henri Verdier was the CEO of Odile Jacob Multimédia, where his work included developing a set of teaching materials for the educational programme La main à la pâte along with Georges Charpak. In 2007, he joined Lagardère Active as Director of Innovation. In 2009, he joined Institut Télécom as Director of Foresight, responsible for establishing the think tank "Digital Future". He is also co-founder of MFG-Labs. Founding member of Cap Digital Centre for Competitiveness, where he served as Vice-Chairmen from 2006 to 2008, before acting as Chairman of the Board from 2008 to January 2013. He is a member of the Scientific Council of Institut Mines-Télécom. He is also a member of the ARCEP Foresight Committee and the CNIL Foresight Committee. Henri Verdier is the co-author of L'Age de la multitude (Armand Colin, 2012).
Published in COMMUNICATIONS & STRATEGIES No. 89, 1st Quarter 2013
> For more information about our activities: www.comstrat.org
Contact
COMMUNICATIONS & STRATEGIES
Sophie NIGON
Managing Editor
s.nigon@idate.org
Interview with Hal VARIAN, Chief Economist at Google
Published in COMMUNICATIONS & STRATEGIES No. 88, 4th Quarter 2012
Privacy, Openess and Trust
Summary of the issue: Information and Communication Technologies (ICT), and the Internet in particular, offer companies the ability to collect large amounts of data about their users, and to use this information as a key input for value creation. New business models based on gathering and aggregating personal data and leveraging big data technologies, lead to innovative market offerings. To become successful, they depend on disclosure (openness) and trust on the users' side. Though the disclosure of personal information might benefit consumers via, for example, better tailored services, openness also creates risks of abuse of personal data, ranging from increasing market power (e.g., due to price discrimination) to privacy breaches by the data holder, or even cybercrime from initiatives of rogue third parties.
Exclusive:
Interview with HAL VARIAN
Chief Economist at Google
Conducted by Marc BOURREAU (Telecom ParisTech, PARIS)
> Discover also the interview with Isabelle FALQUE-PIERROTIN, President, CNIL
C&S: What are the crucial dilemmas and tradeoffs with respect to privacy, openness and trust for end users but also for service providers, and the potential risks?
Hal VARIAN: I share all sorts of personal information with my doctor, lawyer, accountant, and bank. Why? Because when they are better informed, they will be able to better help me. The same is true of online information service providers: if they know my calendar, they can remind me of meetings; if they know where I am, they can provide better directions; if they know what I like, they can make better recommendations. The important element is trust. If I provide information to these parties, will that information be used to help me, or will it be used in a harmful way? We have established norms for professional services, but the internet is a new environment, so these norms are not fully developed.
How can we explain the apparent naivety of some consumers and the reluctance of others in the disclosure of personal information, despite the stronger awareness of data usage and related risks? To which extent do service characteristics influence consumers' reaction to information disclosure?
Academic studies have shown very wide dispersion in attitudes towards privacy. Some people are very concerned about privacy and others really don't care much at all. This makes it difficult to have a one-size-fits-all model, which means you must offer people choice. I expect that as people become more familiar with the benefits of information technology, this dispersion will be reduced.
How can firms make sure that users have enough trust so that they will provide their personal data in order to obtain innovative services?
A big brand name firm, like Google or Microsoft, has a lot to lose if they make a mistake in this area so they have a strong incentive to be extra careful in managing user information. Smaller firms may lack the incentives and the expertise to take sufficient care.
Can we expect new models empowering end users with their personal information, around for instance vendor relationship management initiatives?
At Google, we build our policy around choice and control. We believe that organizations should offer the user a choice about what data is collected and that the user should be in control when it comes to their data.
Do big data represent a major disruptive innovation as some argue (e.g., Erik Brynjolfsson)?
Yes, I think that the big data will be disruptive. People will come to expect much more efficient online services. Companies that build trust and can offer such services will have a competitive advantage.
What kind of public policy, if any, is needed to ensure that there will be sufficient trust in electronic markets so that data-demanding innovations can flourish, and how does it influence the value of personal information?
As I mentioned earlier, I think that norms will develop in this area. At this time the important thing is to avoid regulation that will inhibit experimentation and innovation.
To what extent should the government protect children and adolescents from behavior that may bring them trouble much later on (imagine a candidate for a high position who gets confronted with an awkward photograph from younger days, decades earlier)?
This is the toughest question you have posed! I think that the best tool is education, so that young people are made to understand clearly that their actions now can come back to haunt them later.
Short Biography
Hal R. VARIAN is the Chief Economist at Google. He started in May 2002 as a consultant and has been involved in many aspects of the company, including auction design, econometric analysis, finance, corporate strategy and public policy. He is also an emeritus professor at the University of California, Berkeley in three departments: business, economics, and information management. He received his SB degree from MIT in 1969 and his MA in mathematics and Ph.D. in economics from UC Berkeley in 1973. He has also taught at MIT, Stanford, Oxford, Michigan and other universities around the world. Dr. Varian is a fellow of the Guggenheim Foundation, the Econometric Society, and the American Academy of Arts and Sciences. He was Co-Editor of the American Economic Review from 1987-1990 and holds honorary doctorates from the University of Oulu, Finland and the University of Karlsruhe, Germany. Professor Varian has published numerous papers in economic theory, industrial organization, financial economics, econometrics and information economics. He is the author of two major economics textbooks which have been translated into 22 languages. He is the co-author of a bestselling book on business strategy, Information Rules: A Strategic Guide to the Network Economy and wrote a monthly column for the New York Times from 2000 to 2007.
> For more information about our activities: www.comstrat.org
Contact
COMMUNICATIONS & STRATEGIES
Sophie NIGON
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s.nigon@idate.org
Interview with I. FALQUE-PIERROTIN, President CNIL
Published in COMMUNICATIONS & STRATEGIES No. 88, 4th Quarter 2012
Summary of the issue: Information and Communication Technologies (ICT), and the Internet in particular, offer companies the ability to collect large amounts of data about their users, and to use this information as a key input for value creation. New business models based on gathering and aggregating personal data and leveraging big data technologies, lead to innovative market offerings. To become successful, they depend on disclosure (openness) and trust on the users' side. Though the disclosure of personal information might benefit consumers via, for example, better tailored services, openness also creates risks of abuse of personal data, ranging from increasing market power (e.g., due to price discrimination) to privacy breaches by the data holder, or even cybercrime from initiatives of rogue third parties.
Exclusive:
Interview with Isabelle FALQUE-PIERROTIN
President, CNIL, France
Conducted by Vincent BONNEAU (IDATE, Montpellier)
> Discover the interview with Hal VARIAN Chief Economist at Google
C&S: What are the current key topics for CNIL when addressing privacy regulation (mobile, social, cloud, etc.)? Is big data specifically on the radar, or is it analysed like any other development?
Isabelle FALQUE-PIERROTIN:
CNIL, as all the data protection authorities, is addressing a wide array of key topics at the moment. As you have probably seen, we are currently having substantial discussions with some major internet platforms, like the ones we are having with Google, about their new privacy policies and the questions they raise regarding European data protection legislation. Biometrics is a major area of concerns, too. Also, cloud computing services have considerably developed the last few years and their use by companies raises new questions in terms of legal and risk management. Reacting to this trend, CNIL launched a public consultation on Cloud computing at the end of 2011, which resulted in the publication of a number of practical recommendations for companies using these new services [1] in order to ensure compliance with the applicable legal framework.
As for big data, it is a convenient way of tackling the emerging paradigm shift in data sciences and data economy. This is why CNIL approaches it not so much as a new topic of regulation per se, but rather as a way to describe the concept necessary to grasp the new economic and sociologic landscape that currently takes shape. This is why it is one of the major trends we are following within our innovation and foresight program, for example.
Can we consider that users are fully aware of the usage of their personal data by third parties? Do they measure the real risks but still arbitrate in favour or usage and innovation? Have they different reactions depending on type of service or personal data?
It would obviously be wrong to assert that users are fully aware of the whole economy behind personal data combinations and analysis. Surely, there is some kind of a privacy paradox, because people express concerns but still use and plebiscite services and systems that are really "black boxes" for them in terms of personal data processing. Let's take tracking systems, such as cookies for examples: one common browsing day means encountering hundreds of cookies, linked in one way or another with dozens of different third parties, intermediaries, operators... the existence of which you are not even aware of. Those systems are not always threatening privacy, but they are surely not known. It cannot be argued that this attitude is only the sign of an absence of concern for privacy: in fact, the issue is probably more complicated and thinking about security and protection is neither "fun" nor rewarding. And finally, individuals do care more about other sensitive personal information, the categorization of which is changing. Geolocation is clearly considered very sensitive data by all, even if we all like location-based services. For example, in a survey we made in December 2011 about "smartphones and privacy", more than 90% of French smartphone users wanted strong control over their locations data. People want to know what happen to their traces and data, and they want more control on them.
The IT ecosystems are more and more developing around platforms aggregating users and developers. What are the additional challenges coming from platforms in terms of privacy?
First of all, the business model there is generally based on free access, sometimes with freemium offers. But, as it's often said for example about Facebook, if you do not pay, you are not a customer. And if you are not a customer, you are most likely to be a product! So a lot of those platforms are running on data, mostly personal data, like a car is running on oil. Therefore, data-minimization and privacy by default are clearly not the natural tendency of those platforms.
Then, as is emphasized in our cloud recommendations, another issue arises around the balance of responsibility between those platforms, developers, users, etc. The "one-stop shop" for users should not hide the fact that you have plenty of actors participating to the service. The standardization of offers and the use of take-it-or-leave-it contracts by Cloud providers to formalize contractual relationships with their customers leave no space to the negotiation of the terms of use of Cloud services. In addition, it appears that providers generally provide very few information to their clients about the technical and organizational measures implemented to guarantee data security and confidentiality of data processed on behalf of clients. This lack of transparency and control mean that their clients do not have all necessary information to comply with their duties as data controllers.
Should personal data collected by tracking, by acquisition from third parties or by direct collect from the user (like a form) be treated/considered the same way regarding privacy aspects?
We are clearly witnessing a revolution in the way personal data is generated and collected today. While all the major data protection and privacy legislations were designed with a basic economic pattern in mind (i.e. the collection of data through paper forms directly with the concerned individual, and the possible resale of such information to third parties), the situation has thoroughly evolved. A lot of personal material is now put online by the individuals themselves, namely on social networks; mobile devices are used for an increasing variety of purposes, which also generate personal data that can be deemed sensitive (geolocation; payment etc.); our browsing activity is tracked and analyzed… These situations are totally different from those that the law originally aimed to regulate, so that the applicable legal analysis can vary. But whatever the services at stake, a number of fundamental requirements will always apply: the person to whom these different data relate must be able to know how they are processed and how to control their dissemination. His or her rights of objection, deletion, rectification must be strictly complied with, by whichever organization they are detained. Otherwise, the operations carried out on such data may not comply with the essential condition of legitimacy that any data processing must comply with. In short, they may be plainly illegal, because of the imbalance between the company's business interests and the rights of the persons concerned.
If personal data is anonymized by service providers and then used for patterns discovery for instance, does it still imply privacy concerns?
Your question raises the issue whether the application of some form of anonymization process to personal data can be considered sufficient to avoid any negative consequence for the individual concerned – and, behind this, whether data protection rules apply. I believe that the answer to this question is two-fold.
To start with, the rule of principle is that anonymized data may indeed be processed in ways which would have been strictly prohibited under an identifiable format. This faculty opens very interesting possibilities, eg in the field of clinical trials, where very sensitive information is commonly processed.
But as simple as it seems, the rule must be applied with extreme caution. For one must be sure, in those cases, that the data processed definitely cannot be re-linked to specific individuals – which takes more, sometimes, than making it impossible to trace back to the person' precise identity, i.e. its first and last names. More generally, data may not be considered as non-personal data when it can be used to determine or influence the way in which the individual behind the data is treated or evaluated – which can be different from detaining her basic identity features.
These issues were well summed-up by the Article 29 Working Party in 2007, in its very thorough working paper on the definition of personal data. More recently, in a very interesting academic paper, Professor Paul OHM even referred to "the surprising failure of anonymization" (2010), and much literature was published lately, whether in Europe or the United States, that goes along the same lines. Indeed, a number of recent case studies have shown that re-identification of specific persons inside an anonymized data set is possible under circumstances. The development of new technologies makes it constantly easier to combine data from different sources, hence to identify individuals that were supposedly unidentifiable in the first place.
With these factors in mind, professionals should carry out comprehensive risk-based analyses, in order to identify and solve any privacy arguments that may occur on their projects. On its side, CNIL works on the development of incentives to develop systematic privacy impact assessments at all stages of data projects, e.g. by developing specific guidelines. Other data protection authorities are working on this idea of anonymization, too: for example, the UK Information Commissioner's Office conducted a public consultation on its draft Anonymization Code of Practice during summer 2012. In substance, the efficiency of anonymization processes depend on the type and number of data processed, the purpose behind this processing, as much as on the technical features of the anonymization procedure.
The issues at stake are fundamental, namely in the light of open data. The development of open data projects triggers huge expectations in terms of innovation and growth, but these must be combined with equally strong privacy expectations. Efficient anonymization is key to reconciling both lines of expectations.
Can we expect new models empowering end users with their personal information, around for instance vendor relationship management initiatives? Should VRM require some specific regulation?
To me, this is quite an educated guess. I think that a trend towards consumer empowerment could emerge in the near future. Whether vendor relationship management can be the ground for effective new user-centric business models around data is not yet established – but it is a smart and legitimate way to think about balancing between individuals and vendors in the incoming data deluge. What seems obvious to me is that those new business models to be developed will need to be met by innovative and modern regulations. For example, when looking at the first prototypes of VRM-based services, e.g. personal data stores, it is easy to anticipate that those operators will have to focus on consumer trust and really be on the side of the consumers. If these projects develop into variables of Trojan horses, encouraging more data dissemination or more uncontrolled combination of data across services, they will either fail or design a very worrying landscape for privacy and individual freedoms.
Moreover, we shouldn't forget that the scope of this is pretty narrow: empowering individuals is a good thing, but it's a mistake if we end up giving them the whole burden of regulation. People don't spend all their day managing their relations with vendors, that's not their purpose in life to deal with them. They are not going to spend a lot of time negotiating and setting these relations, and so it may actually not be in their best interest to have a 100% market-oriented point of view. We should never forget that privacy isn't solely a consumption and market issue: it's above all a citizen freedoms and rights issue.
How are taken privacy-related initiatives from data protection agencies at the national level?
At the European level? Is it enough when dealing with non-European companies (typically the US-based internet giants)?
The year 2012 provides us with two cases of stronger cooperation between European data protection authorities (DPAs), and between them and other non-EU DPAs. First, the Irish Data Protection Commissioner led a comprehensive audit of Facebook compliance with European Data Protection law, which was instrumental in the decision by Facebook to change the way its face recognition tools are used on its European platform (the photo Tag Suggest feature, for example).
Then, the Article 29 Working Party mandated CNIL to lead the European investigation into the new privacy policy which Google implemented in March 2012. It was really the first time that a national authority was leading a process involving all 27 agencies. The letter sent to Google on October 16th was therefore signed by all the chairpersons of the agencies, not only by CNIL and Article 29 Working party chairs.
Two questionnaires were successively sent to Google to address the numerous implications of by these changes. The analysis of Google's answers and the examination of numerous documents and technical mechanisms by CNIL's IT and legal experts have led all the EU DPAs to draw their conclusions and make substantial recommendations of change to Google. We recommend that clearer information is provided to users. Also, we require Google to offer improved user control over the combination of data across its numerous services, and to modify the tools it uses to avoid an excessive collection of data. The release of this October report clearly is not the end of the process. We shall follow-up on these recommendations over the coming months, together with our EU colleagues as well as with other non-EU DPAs which endorsed our common findings. As you can see, cooperation among DPAs is an efficient lever for regulation and compliance, even when dealing with non-European firms. This is why this point is, to me, a core issue in the debate around the future EU privacy regulation.
Short Biography
Isabelle FALQUE-PIERROTIN graduated in France from the HEC School of Business Management ("Ecole des Hautes Etudes Commerciales"), the National Administration School ("Ecole Nationale d'Administration") and the Multimedia Institute ("Institut Multimédia"). She first held various posts with the French State Council ("Conseil d'Etat"), as an "auditeur" from 1986 to 1989, a "maître des requêtes" (counsel) from 1989 to 2001 and was responsible of the relations with the print and broadcast media from 1988 to 1991. Ms. Falque-Pierrotin also served as Deputy Chair of the French Ministry of Culture and French-Speaking World Matters from 1993 to 1995. She became State Counselor ("Conseiller d'Etat") in November 2001. After serving as Chair of the Interministerial Commission on Internet Affairs in 1996, she was appointed as an expert adviser for the Organization for Economic Cooperation and Development (OECD) in 1997 and as "rapporteur général" of the report of the French State Council on "Internet and Digital Networks" from 1997 to 1998. From 2001 to December 2010, Ms. Falque-Pierrotin was Chair of the Advisory Board and General Delegate ("délegué générale") of the French Internet Rights Forum ("Forum des droits sur l'internet").Isabelle Falque-Pierrotin has been a member of the French Data Protection Authority ("Commission nationale de l'informatique et des libertés") since January 2004. Appointed as Deputy Chair of this authority from February 2009 to September 2011, she became its Chair as of September 21, 2011.
> For more information about our activities: www.comstrat.org
Contact
COMMUNICATIONS & STRATEGIES
Sophie NIGON
Managing Editor
s.nigon@idate.org
[1] See "Cloud computing: CNIL's recommendations for companies using these new services", 25 June 2012.
DigiWorld Summit 2012
"Game Changers: Mobile, Cloud, Big Data"
Opening day of the 34th Summit: The future of the digital economy according to its leaders
This morning IDATE Chairman François Barrault opened the 34th edition of the DigiWorld Summit in Montpellier. The Summit has become one of the must-attend events each year for playmakers in the telecom, Internet, television and video game industries. It will bring together more than 1,200 participants and 130 speakers from over 20 countries around the world.
IDATE and the members of the DigiWorld Institute are putting the spotlight on “Game Changers: Cloud, Mobile, Big Data” for this year’s Summit. The objective of the event is to discuss the factors that will lead to the emergence of the next decade’s digital leaders.
Executives from device and cloud heavyweights as well as content providers and telecom operators will present their views on these subjects over the next two days.
John Chambers, CEO of Cisco, affirms that the pace of innovation today is the fastest it has been in the past 25 years.
Hans Vestberg, CEO of Ericsson, stresses the need to combine a strategy of vertical integration and openness to “capture the innovation of other players.” For Ben Verwaayen, CEO of Alcatel-Lucent, Europe should speed up LTE rollouts despite the economic uncertainties. Qualcomm Chairman Paul Jacobs, riding high on the success of the firm’s technology, which is used in many smartphones and tablets, predicts a “sixth sense, in that everything will be connected around us.
In addition to such distinguished speakers, the DigiWorld Summit is also recognized for its detailed preparation of the themes and the series of sessions based on IDATE analysis. During the opening session the Institute’s experts will each present an overall analysis of their focus sectors. They will highlight the dominant role of three game-changing factors applicable to all the links in the value chain:
- Mobile’s irresistible momentum, with the battle of the OSs and then LTE, which is expected to be central to the new differentiation strategies to break out of the price wars.
- The Cloud, which for IDATE is not limited to externalized enterprise computing (“cloud computing”) but includes application distribution architectures (including for audiovisual content), shaking up traditional roles.
- Big Data, an asset that all players will be looking to capitalize on through real-time applications, aiming to enhance their services and offerings (devices, content, connectivity services, storage and application platforms, etc.).
Three important voices offer a counterpoint to IDATE’s analyses: Ben Verwaayen, the boss of Alcatel-Lucent, Léo Apotheker, former chief of SAP and HP, and Carsten Schloter, CEO of Swisscom. Overall the messages converge, with all three insisting on one point: Europe has a lot going for it. However, these pluses are particularly concentrated in the telecom industry, which is currently suffering multiple ills: the economic situation, its relative disintegration and the constraints of a world where traffic is exploding but applications tend to lean in favor of over-the-top (OTT) players.
The sessions on November 15 will be devoted to sketching a potential next-generation telco. Presenters include Terry Denson, Vice President of Global Strategy for Verizon, Stéphane Roussel, CEO of SFR, Jean-Ludovic Silicani, Chairman of ARCEP. The heads of Ericsson and Orange, Hans Vestberg and Stéphane Richard, will close the debate. Some big names in traditional content (the BBC) and new online platforms (like Netflix) will also be present. A conclusion will be given by players that hold promising futures in platforms with IBM, Amazon, BT and Cisco.
Also note that five executive seminars will be presented on November 14 and 15, on the following topics:
- Impacts on privacy, with the input of Google and CNIL.
- Key issues for next-generation networks: FTTx, LTE, etc.
- Expectations surrounding the rise of smart cities.
- Perspectives related to the concept of smart TV.
- New business models for video gaming.
> Follow live the plenary sessions: Live streaming DWS12 !!!
> More information about our program and our speakers on the website DigiWorld Summit 2012
DigiWorld Summit: Key players
"Game Changers: Mobile, Cloud, Big Data"
They are the key players of the Digital news and the Digital World… they will be at the DigiWorld Summit !
On sait que le groupe Vivendi se considère comme trop endetté pour rester en l'état et que sa préférence pourrait être de vendre ses actifs dans les télécoms (SFR, Maroc Telecom, GVT). Récemment, la presse a relayé les discussions engagées autour des mariages de SFR avec Numéricâble ou avec Free . Au-delà des considérations propres à Vivendi, ces rumeurs s'inscrivent dans le contexte très déprimé des opérateurs télécom en Europe (secteur maintenant globalement en récession tant pour les mobiles que pour le fixe) et confronté à des investissements lourds et des transformations rapides de leurs business models face à la migration des applications vers les acteurs OTT (Over The Top)… Il est probable que tout ne sera pas dénoué avant le DigiWorld Summit et que beaucoup d'intervenants de la journée du 15 novembre seront écoutés avec attention!
Stéphane ROUSSEL, Président & CEO, SFR (keynote le 15 novembre à 12:10)
Mais aussi :
Jean-Ludovic SILICANI, Président de l'ARCEP (keynote le 15 novembre à 12:35)
Anne BOUVEROT, Director General GSMA (Session Next Gen Telcos, 15 nov 11:15)
Et encore:
Michel COMBES, ex CEO Vodafone Europe (Session Next Gen Telcos, 15 nov 11:15)
Stéphane RICHARD, Président & CEO, France Telecom-Orange (keynote 15 nov à 3:45)
> More information on the website DigiWorld Summit 2012.
DigiWorld Summit: Key players
"Game Changers: Mobile, Cloud, Big Data"
They are the key players of the Digital news and the Digital World… they will be at the DigiWorld Summit !
A third of all the Smartphones purchased by consumers during the 3 Q is a Samsung Device (<56 millions of smartphones vs. <30 for 3 Q 2011 ) …
Vassilis SEFERIDIS, Director European Business Development Samsung Electronics will participate to the Round-Table on Nov. 14 at 11:00am " Smart Devices ecosystems vs. Open Cloud".
Microsoft launches its Windows 8 . This is not only the last version of its OS which is operating >90% of the worldwide PC… It's really a new product which must give a new chance to the PC facing the other devices. .. the opportunity for the company to come back in the smartphones and tablets competition…
Speaker to be confirmed : we don't know today his name (!), but we will welcome an Executive from Microsoft at the Summit for a keynote speech on November 14, just before the lunch.
Julien LESAICHIERE, Windows Azure Platform Lead, will participate to the last panel of the Executive Seminar 3Big Dta & Privacy" on Nov 14.
Google which dominates the Web research engine market but also owns Android, Google Map or Street View and has a real ambition in the cloud based services, is again asked to give more information about its private data policy…
Barak REGEV, Enterprise Cloud Platforl Lead will be the invited Keynote speaker for the Executive Seminar of the Summit devoted to "Internet Economics, Big Data & Privacy" (November 14, afternoon);
Hal VARIAN, chief Economist at Google is one of the two high level people interviewed in the special issue of the DigiWorld Economics Journal, (Communications & Strategies N°88), which is also dedicated to the theme "Privacy, Openness and Trust). The other interview is done with Isabelle Falque PERROTIN, President CNIL (Fr.)
> More information on the website DigiWorld Summit 2012.
DigiWorld Summit: Key players
"Game Changers: Mobile, Cloud, Big Data"
They are the key players of the Digital news and the Digital World… they will be at the DigiWorld Summit !
Tivo launches its new box: "Tivo Stream". The device allows one to watch programming that has been record on the TiVo Premiere on any iOS device on the local network. An upgrade for the Android TiVo application is in the works so Android devices should be able to use the device soon. ..
How this type of Personal Cloud will coexist with cloud-based DVR solutions?
Jason WONG, senior Director of International Products, TIVO will participate to the session Smart Devices ecosystems vs. Open Cloud on November 14 at 11:00 am.
Netflix which is now involved in Europe, announced last week that the company added 1.2 million new US customers during the third quarter, bringing their subscriber total to 25.1 million -- almost a third of all homes with broadband… Nevertheless, Morgan Stanley analysts to insist that Netflix needs to raise prices: the company spends more on content as a percentage of subscriber revenue (62%) than cable networks,. They consider that Netflix’s $8-per-month Internet streaming service is too cheap. The problem of course is that Netflix cannot ignore the growing threats from Amazon, HBO and the coming RedBox/Verizon joint venture …
Ted SARANDOS, Chief Content Officer, Netflix, will be one the keynote speaker on November 15 at 10:20.
Verizon is very close to launch its joint venture with RedBox (CoinStar group) to compete with Netflix with a video streaming product…
Terry DENSON, VP, FiOS TV Content Strategy & Acquisition, Verizon will be present to the session From NGN to Next Gen Telcos on November 15 at 11:15am.
> More information on the website DigiWorld Summit 2012.
DigiWorld Summit: Discover our speakers!
"Game Changers: Mobile, Cloud, Big Data"
Smart Devices ecosystems vs. Open cloud
Smartphones, and to a lesser extent set-top boxes, have in recent years been viewed as strategic components for disseminating innovation, sharing value and structuring digital ecosystems. Are operating systems and store apps going to retain this strategic character in the era of HTML5 and Cloud Computing? Are we going to see the distribution models for smartphones and set-top boxes coming closer together?
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> More information on the website DigiWorld Summit 2012.
DigiWorld Summit: Discover our speakers!
"Game Changers: Mobile, Cloud, Big Data"
Game Changers, Global introduction
IDATE experts will launch the conference detailing the program and introducing the questions that will be debated during the different sessions.
François BARRAULT, Chairman - Yves GASSOT, CEO - Vincent BONNEAU, Head of Internet BU - Gilles FONTAINE, Deputy CEO - Frédéric PUJOL, Head of Mobile Practice
We have also invited ten or so executives from the largest companies in our sectors to share their opinions of the Game Changers in short video interviews before the sessions begin…
Keynotes
Three of the digital market leading figures will be present at the Summit to respond to IDATE's analyses and to the interviews of key personalities.
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> More information on the website DigiWorld Summit 2012.
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